Even without their rising world profiles as a starting point, it has long been a common enough exercise to compare and contrast India and China at various stages since the end of the Second World War. While the two nations started out under their new leaderships as developing nations united against colonialism and attempted for a time to work together as beacons for Asian rejuvenation, the realities of geopolitics, differing viewpoints about history and civilization and the remnants of imperial legacies soon resulted in a short border conflict in 1962 that however has cast a long shadow on their relations.

During the Cold War, the contrast between the two countries was also political and ideological and for a time, especially in the wake of revelations about Chinese communist excesses of the Great Leap Forward and the Cultural Revolution, it was assumed that India with its regular elections was doing much better than China was. However, despite its problems, communist China also raised considerably the social and human development indicators of its people while India continued to remain mired in poverty, illiteracy and various forms of social backwardness. There was also the brief interregnum of Emergency, which also tarnished India’s reputation as a paragon of democratic virtues in the developing world.

However, none of these developments and contrasts was nearly as consequential as those that would come following the beginning of China’s economic reforms and opening up in the late 1970s. By the time India started its own economic liberalization programme in 1991, China had started opening up a gap with India on the economic front in addition to the lead in social indicators that it already held. At the turn of the millennium, China could genuinely claim the mantle of a rising world power in both political and economic terms, while India was struggling to shake off the international opprobrium that came in the wake of its 1998 nuclear tests and to get into the same high economic gear as the Chinese had. Both its growing economy and a combination of international circumstances involving worries about China’s perceived challenge to the United States as well as its rapid military modernization combined to make India attractive again to the world at large before the 2008 financial crisis and government paralysis combined to put the brakes on India’s economic growth again, if not quite its political importance. Nevertheless, the India story also now appears to have a momentum of its own with a young demographic, active state governments and an economy unburdened by the shackles of an earlier command economy and free to make the adjustments to domestic and global circumstances as necessary.

The purpose of this chapter is to examine in more detail the role of Chinese provinces in the country’s growth story and to see how this experience can be a learning experience for Indian states. Indeed, some have already begun to both learn from and imitate the Chinese experience as well as to chart their own ways given the differing national and local conditions. It might seem a strange exercise to be comparing two states – one, communist, authoritarian with an ostensibly centralized government structure and the other, democratic and federal in structure. But the reality shows that China has been far more open to decentralization than is commonly assumed while India has been far more unitary than its federal structure mandated. Further, as two large countries with similar development challenges including those of large territories, huge populations, wide regional differences, environmental stress, and despite India’s democracy, issues of corruption and various forms of social conservatism, on the one hand and challenges of administration and management on the other, the two states – including Chinese provinces and Indian states – often have more in common than is usually acknowledged.

Chinese Provinces Deal with the World

Today, China has a total of 31 administrative units directly below the central government in Beijing – 22 provinces, five autonomous regions and four provincial-level cities – all of ostensibly equal rank in the administrative hierarchy but in practice far from so. In addition, Hong Kong and Macao exist as separate Special Administrative Regions. A numerical comparison, at least, with India, is rather obvious – India has a total of 29 states and seven union territories. Chinese provinces do not have powers that inherently belong to them by law as in the American system. Instead, as in the Indian system, whatever powers that the provinces exercise are delegated from the centre. Further, in both Indian states and Chinese provinces have the ability to constantly lobby the centre for resources and particularly in the Chinese case, for greater flexibility in formulating and implementing policy. Chinese provinces today derive leverage from several sources, some of which are also true in the case of Indian states. By virtue of their size, provinces often require their political leaders to have considerable authority to coordinate the development of goods and services in their territories, while in India the rise of several regional parties and their importance to coalition governments at the centre have meant a concomitant rise is the influence of the states.

There are other features of the Chinese political system that give the provinces leverage. Since 1984, for example, each province has largely controlled the appointment of all but the highest officials and the provincial party system is a very important actor in the Chinese structure. All major construction projects and enterprises of the central government require active provincial cooperation in mobilizing and organizing resources and services with the post-Mao reforms in particular depending heavily on a cooperative relationship with the provinces. The fundamental policy approach has been to let every province do the most by itself to develop the local economy and fast enough to maintain political and social stability. This national strategy in turn, has made it necessary that provinces and lower level territorial units enjoy considerable room for initiative and also be able to enjoy the fruits of their success. The provincial authorities too, see themselves as acting rationally, given both the prevailing economic climate and the obligations to raise capital that the central government itself has imposed on them. Local revenue targets demanded by the central government for instance, together with the availability of investment capital from non-central government sources have increased the ability of provincial governments to develop a degree of autonomy.

In addition, the loss of ideology as a tool to maintain government credibility, the quest to get rich and the consequent corruption have significantly affected the Chinese central government’s ability to keep the provinces in line. While Beijing’s powers and resources to control the provinces are not inconsiderable, provincial leaders have enough maneuverability to either ignore orders or prioritize them lower than the central government would. In the process, the central government has often been caught in a bind, and China, in fact, witnesses a constant cycle of centralization and recentralization of powers between the centre and provinces and this has been as true of the country under the Communist Party of China as it has been under imperial dynasties. An additional feature in modern China is of individual cities too gaining in power and influence as a result of their economic growth and prospects and beginning to contend with their host provincial government.

Doubts about the durability of the central state structure in China are however, overstated. …

India and the Chinese Provincial Experience

The connection between Chinese provinces and India in the post-colonial and post-reforms period is the strongest in the case of China’s southwestern Yunnan province. The Bangladesh-China-India-Myanmar Regional Economic Cooperation Forum (BCIM) idea which is the foundation of the new BCIM Economic Corridor (BCIM-EC) idea proposed by the Chinese in 2013, in fact, originated from Yunnan and was initially called the Kunming Initiative after the province’s capital.[22] While it may appear that the central government has taken the lead in the BCIM-EC, it is still Yunnan province that has the most to gain from the construction and activation of the Economic Corridor.

Yunnan’s cue to start developing transnational linkages came in the 1980s with the slogan of ‘gateway into Southeast Asia’.[23] The Yunnan provincial government had resumed border trade in 1980, beginning with Myanmar and following the State Council’s declaration in 1984 that border trade would be regulated and implemented by the respective provincial governments, the Yunnan government followed up by issuing its own provisions on border trade in 1985 to further relax controls on border trade. Trade along its southern border has continued to grow ever since. In a case that should offer plenty of lessons to India, in 1996, the central government stipulated quotas and license controls on border trade together with additional taxes and the provision that trade be carried out using US dollars. While the policy was an attempt to move border trade up to the level of normal international trade and to restructure Yunnanese enterprises, it failed to take into consideration the high fragmentation of border trade and the low level of economic development in the countries across the international border. By late 1998, the provincial and central governments had taken measures to improve the situation and trade has been on an upswing since.[24] Consider by contrast how India has gone about its own border trade – border states continue to be limited by restrictions on the number and types of goods they can trade in addition to being stymied by poor physical and financial infrastructure in the border areas. The desultory nature of official trade (as opposed to illegal trade) at Nathu La in Sikkim, Moreh in Manipur or Zokhawthar in Mizoram is a case in point. Even as Chinese border provinces such as Yunnan, which is practically next door to India, have notched up rapid rates of growth in border trade with all of its foreign neighbours, India’s border states continue to languish under the yoke of an unimaginative central government-directed border trade regime.

While Yunnan’s most active connections remain with its neighbours such as Myanmar and the Indochina countries, it also has for the time being almost exclusive access among Chinese provinces to South Asia through the BCIM Forum. To start only from the British colonial era in India, it is worth noting that in 1858, the Assam Association in a petition to the Secretary of State in London had suggested the opening up of a practicable route to southwest Yunnan ‘for the purpose of making the industrious population of the latter available for work in Assam.’[25] It was not until World War II, that such a route was opened albeit for military exigencies and by the Americans rather than the British. The Stilwell Road was however, soon neglected owing to the new political formations that took shape in the region following the end of the War. However, calls for the renovation of the road link were frequently heard from local governments in India’s northeast[26] joined also by demands from the Yunnan provincial government.[27] Indeed, several linkages have been built up between Kunming and Kolkata since the latter is the most economically developed of India’s regions nearest to Kunming.[28] Yunnan’s many universities and think-tanks also devote substantial research to Indian and South Asian issues and Kunming is the host of many China-South Asia forums involving businesses, think-tanks, and so on.

At the same time, there are other Chinese provinces that are competing for Indian attention as well as Chinese central government funding for research on and outreach to India. One such is Sichuan in central China, one of the country’s largest provinces in terms of population and also a politically powerful constituent in the Chinese political system. Chengdu, the capital is home to the Institute of South Asian Studies under Sichuan University, one of the oldest research centres in China devoted to South Asia and one which perhaps because of this reason, also hews more closely to traditional more conservative Chinese formulations of India, Indo-Pak relations, and so on.

Moving to the larger picture, Chinese plans to increase investments in India, particularly, in the form of infrastructure financing, as a way of compensating for India’s growing trade deficit with China – a major problem in bilateral ties – will be increasingly negotiated at the sub-national level. Given China’s offer to finance up to 30 per cent of India’s physical infrastructure investment requirements for 2012-2017, estimated at some US$1 trillion,[29] will no doubt involve the state governments in India and involve not just Chinese central government state-owned enterprises (SOEs) but also provincial SOEs.

New Delhi and the Indian state capitals have in fact, been aware of the importance of the sub-national approach towards China for some time now.

…

Conclusion

Despite its federal structure India has always been a fairly unitary state until federalism got a fresh lease of life with the advent of coalition politics. With globalization and the proliferation of economic linkages at multiple levels between nations, Indian states will play an increasingly vocal role in the immediate term on issues such as foreign economic policymaking including trade agreements and investment policies that particularly affect state interests and on issues where overriding national security interests are not at stake. It is equally important to remember that not just problems, but solutions too, can be sub-national in origin and application.[38] National governments will, therefore, need to pay attention to such opportunities in order to have additional options in their foreign policies.

Economic exchanges at the sub-national level as well as sub-regional transnational groupings allow for experimentation in various methods of cooperation between India and China. With increasing central government concerns about access to food, energy and raw materials, the states/provinces perhaps provide the necessary level of flexibility and speed in addressing some of these issues. What has certainly happened in the case of China is the increasing willingness to let provinces innovate with respect to their closest international neighbours. India needs to follow suit. Transnational initiatives such as the Stilwell Road are likely to be espoused more strongly by provincial governments whether Yunnan on the Chinese side or the state governments in Northeast India as they are of much greater direct economic and development benefit to these local governments than to the central government of either country. China’s central government-directed Silk Roads also have potential benefits at the provincial level that could extend to the smaller countries in South Asia as well as to Indian states such as Jammu and Kashmir or Punjab or those that border Nepal. This in turn throws up new dynamics of looking at centre-provincial relations as well transnational linkages of the sub-national units in either country.

There are strategic-military and political consideration here that will increasingly need to be reexamined in the light of such developments. The many transnational groupings rising along the borders of India and China could provide the opportunity to reintegrate sub-regions that were historically closely tied, whether politically, economically and/or culturally but were divided in the modern era by Western colonialism and by Westphalian notions of the nation-state. In addition, increasing economic and people-to-people exchanges between the state governments in India and the provinces in China have the potential to achieve a positive transformation of India-China relations.

[15] There has historically been a Uyghur minority of traders in Pakistan while in more recent years many went to train and fight in Afghanistan against the Soviets. For more on the linkages between Pakistan and Xinjiang, see Jabin T. Jacob, ‘Chinese Strategic Interests in Pakistan Occupied Kashmir’, in P. Stobdan and D. Suba Chandran (eds), The Last Colony: Muzaffarabad-Gilgit-Baltistan (Jammu: Center for Strategic and Regional Studies (CSRS), University of Jammu, 2008), pp. 125-56.

[30] For more on the interactions between India and China involving their respective state and provincial governments see, Jabin T. Jacob, ‘Thinking East Asia, Acting Local: Constraints, Challenges, and Contradictions in Indian Public Diplomacy’, paper presented at Workshop on Public Diplomacy, Middle Powers and National Strategies in East Asia, Seoul, South Korea, 14 June 2013.